All Forum Posts by: Account Closed

Hey BP,

I have a 3-unit student rental nearby and I'm thinking about selling it. I'm trying to understand how buyers might value the property. Being 3 units it is residential in size but the use is strictly commercial being historically just for students at UNH. Perhaps it makes more sense to value the property based off of the income and market cap rates?

Hoping to get others' opinions on how to begin this analysis.

Thank you!

Thank you all who responded. 

Kiley - I connected with Caroline Davis, a local broker and manager and she has got things in the right direction. I'm grateful to have been connected with her. https://www.welcometohuntsville.com/

What has been your experience with AHI? 

Hey BP,

I have a single family rental in Huntsville, AL. It has been on the market for 45 days with only 2 showings and no applications. It is currently being managed by AHI. 

I'm pretty disappointed with this turn of events and wondering if anyone else has had troubles with AHI or if anyone has other management they might refer? The single family is specifically in Owens Cross Road.
Thank you!

Jon

@Mason Fiascone 

Mason thank you for reaching out! It is funny that you brought this back from the grave! 

I took the 70k and bought more turnkey properties because I do believe in that strategy. Simultaneously, I wanted to acquire more properties local to me.... so I got creative. I sent letters and phone calls to off market owners and I got 9 units lease-optioned to me. This is taking the majority of my day to day as I am "turning around" the properties so when the lease-option ends I can refinance the properties for more than I agreed on in the purchase price.

At this stage, I am looking to do what you suggested, syndicate/joint venture on "larger" multifamilies. It'll steer me away from more turnkey purchases in the meantime, but once my income grows more, I can revert back to that anyways.

I'd love to hear more about your story

Jon

Hi @Franco Epifania

Cap Rate puts a value on the Property, Cash on Cash evaluates the Deal. For instance, Cap Rate is NOI / Purchase Price. It takes financing out of the equation. What Cap Rate does is tell you how well the property operates. Whereas, the Cash on Cash Return evaluates the deal, including financing.

Something I find really surprising is how often people are so focused on investors or the deal and neglect to think of who their customers are. Tenants are customers and they are also stakeholders in this business. Housing can be a very emotional decision and as investors we monetize our tenants' need for housing. 

I hope it goes without saying but we need to treat tenants fairly. With that said, I think all tenants would more likely be an asset since they provide income to you. They become a liability when your relationship goes south. Always be straightforward, decisive, and friendly and you'll manage expectations well 90% of the time. 

@Andrea Chester I think a Master Lease Option or Owner-Financing strategy would be your best bet. 

In both cases, if you can improve the NOI of the property, you may be able to refinance without putting capital as a down payment. Being picky on your deals will be crucial with these options

There's some pretty awesome answers here, it's very informative. For me it was systemizing my days and networking constantly. Both have contributed greatly to my deal-flow, my base of knowledge, and my actual tangible growth as an investor. 

Hi Solon,

Great question - this can be really frustrating. For starters, find out what the cap rate is from your own research: recent sales of comparable properties, call local assessor's, search online (I recently found New Hampshire posts their own opinion of cap rates!), and call all sorts of Brokers and Managers.

In terms of analyzing deals, I don't like making offers on potential income or broker's suggested expenses.. I like making offers on actual numbers, a Trailing-12 (T12) and a rent roll and then request proof of these statements once you're under agreement. And of course, take a step back and input things such as vacancy or higher maintenance or your own management costs etc.

Jon

@Emily Cole my suggestion is getting the right property. The property I bought is perfectly situated for those who have a car and work in addition to school or are grad students. Essentially stay away from the party area - that area serves a purpose and its landlords who don't keep their properties in good condition and make a lot of money on it.

There are countless students who are very responsible and don't have time for shenanigans. Seek them out with advertising on grad student sites or specific majors etc.. perhaps put fliers in buildings where they have classes. Just be careful to not break Fair Housing Laws, it is important we treat every prospective tenant with the exact same process.